Disability Insurance Law Center

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Legal Causes of Action

What is Disability Insurance?

History of Insurance Industry Denial

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Q: How does Disability Insurance Work?

Individual Disability Insurance (DI) is designed to protect employed individuals from financial disaster in the event of a disability that prevents a person from working. The odds of an individual becoming disabled for ninety days or more before age 65 is one in eight. In contrast, the odds of a house burning down are nearly one in 1,200. As medicine advances, doctors can more often prevent death; however, frequently the patient suffers from a permanent or long-term disability. In addition, a study of 2000 severely ill patients indicates that although 96 percent had health insurance, 31 percent lost their life savings. Twenty-nine percent of the patients lost their major source of income as a result of their illness. In the United States, 48 percent of all mortgage foreclosures are caused by the onset of a disability. Unlike workers compensation, DI supplements an individual's income even in cases where their sickness or injury did not result from a job related incident. For this reason, the availability of DI, and the ability to collect on a DI policy in the case of a long-term disability are extremely important for the average worker.

Q: I can no longer work and my insurance company is refusing to pay me. What can I do?

A: Unfortunately, you may need legal help. A lawyer can help you protect your policyholder rights and put an end to delaying tactics. If the insurer denies coverage, you can attempt to get the court to order short-term payment. Usually however, it will take over a year to fight for your benefits while the case is in litigation. The amount you may receive may include damages for the insurance companies bad faith in denying your claim.

Q: I am out of work, how can I pay my lawyer?

A: If you have a private disability policy, have been disabled and the insurer is refusing to pay, our attorneys may represent you on a contingency basis, where the you would pay out of the proceeds of any eventual settlement, with the lawyer receiving a percentage of the recovery from the insurance company.

Q: What types of Cases do you handle?

We handle claims by individuals for non-payment and termination of payment long-term disability (LTD) benefits. We also represent people in denials of benefits under long-term disability plans, non-ERISA (private and public employee group plans). We also handle ERISA claims.

Q: Why do Insurance companies refuse to pay?

Economics. In the past twenty years many high-income professionals were believed to be good risks for disability income insurance. The industry believed most or many would never makes claims, but unfortunately, the number of people injured defied the odds. The number of claims mounted and the insurance companies such as Unum Provident Group, Paul Revere and Guardian faced losses on these policies. The industry aggressively looked for ways out of paying these policies, and in some cases may have crossed the line, unlawfully denying many professionals owed money under insurance contracts.

Q: What is ERISA?

A: ERISA is an acronym for the Employee Retirement Income Security Act of 1974. ERISA was passed by Congress in 1974 to combat corruption in many pension plans. Ironically, ERISA was not originally designed to control medical or disability insurance plans, but the phrase in the act "employee welfare benefit plan," has been subsequently interpreted by federal courts' to ERISA control over nearly all private employee benefits, including health, disability, life and pension plans. We do not handle ERISA claims.

Q: Am covered by a private plan or ERISA?

A: ERISA controls nearly every employer-sponsored benefit plan, but does not apply to individual policies purchased privately. If you are a public employee you are also outside of ERISA.

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